It is Christmas of 1924, three months after Alone in the Dark. "Supernatural Private Eye" Edward Carnby and his partner Ted Stryker are investigating the kidnapping of young Grace Saunders. The trail of clues leads to an old mansion named "Hell's Kitchen" - the home of an infamous gangster boss and his gang. Edward decides to pick up the trail when he learns of Ted's disappearance in the mansion. Unfortunately, Edward soon finds out that Ted has been murdered.

Carnby eventually finds out that the mobsters are the corporeal forms of the spirits of pirates that plundered the sea hundreds of years ago, the lot having sold their souls in exchange for eternal life through voodoo magic. Fighting his way into the house and ultimately onto a pirate ship hidden in the cliff on which Jack's house is built, Edward must survive, discover the secret of the pirates' apparent immortality, rescue little Grace, and find out why the pirates are so interested in her.